Who: The Advertising Standards Authority (ASA) and Phillipson Hardwick Advisory Ltd t/a The Tax Hero, Quickly Finance Ltd t/a Fast Track Reclaim, Total Tax Claims Ltd t/a Total Tax Refunds
Where: United Kingdom
When: 31 May 2023
Law stated as at: 9 June 2023
What happened:
The ASA has taken action against a number of companies promoting tax repayment agents’ services.
Background
This follows a consultation from His Majesty’s Revenue and Customs (HMRC) on protecting customers claiming tax repayments which ran in 2022. It resulted in the government announcing its plan to introduce legislation which would make assignments of income tax repayments have no legal effect and introduce a new requirement for tax repayment agents to register with HMRC.
Rulings
In this light, the ASA has banned three ads for tax repayment agents. The issues that came up in all three ads were that:
- The advertisers misleadingly implied that their free online tools would confirm whether a consumer was entitled to a refund from HMRC. For example, one of the ads claimed: “Takes less than 60 seconds to complete. Check if you qualify for a tax refund worth up to £624“.
In reality, the tools neither informed consumers whether they owed a refund from HMRC, nor provided an estimate of the amount available to them. The ASA considered that the online tools only checked, if consumers were eligible for the advertisers to submit a claim on their behalf to HMRC. The ASA, therefore, considered such ads to be misleading.
- The ads overstated the amount of a refund likely to be achieved by consumers and failed to make it clear that a final refund was subject to a fee (with a certain sum minimum), or that consumers could apply for a refund directly from HMRC free of charge.
The ASA considered that the amounts of refund available to consumers under the ads depended on a variety of circumstances, and none of the advertisers provided sufficient evidence to substantiate the refund amounts claimed in their adverts.
Additionally, some of the advertisers did not reveal the percentage fee taken by the company would a customer receive a refund from HMRC (they referred to their terms and conditions instead). Those ads which did specify this information, in the ASA’s view, did not put significant prominence as to the size, and placement of such information.
Further, the ads did not specify that consumers could claim the tax refund themselves at no cost by applying directly to HMRC.
The ASA considered the above information to be a significant factor which was likely to affect the consumers’ decision regarding application for a refund. Therefore, omitting such information made the ads misleading.
Two ads were also challenged for not making it sufficiently clear that consumers were signing an “assignment” when claiming their refund with the use of the advertisers’ services. By this process, they transferred the legal benefit of the claim to the advertiser. The assignment, depending on the period set out in it, could also relate to other repayments owed to the customer for preceding years. Again, the ASA considered it to be a significant factor that could affect the consumers’ decision, and omitting such information made the ads misleading.
Why this matters:
These decisions raise profile of the recent HMRC’s action on protecting customers who claim tax repayments and increasing transparency around the issue. The ASA has shown its proactive position in supporting HMRC in this field, and has committed to protecting consumers from misleading ads about such services and provided some guidance to advertisers on the matter in its recent rulings.
